Solutions to attract enterprises investment in agricultural area in provinces of red river delta

1Nghiên cứu trao đổi ● Research-Exchange of opinionTạp chí Khoa học - Trường Đại học Mở Hà Nội 71 (9/2020) 1-5 SOLUTIONS TO ATTRACT ENTERPRISES INVESTMENT IN AGRICULTURAL AREA IN PROVINCES OF RED RIVER DELTA Nguyen Thi Thanh Tam* Date received the article: 2/3/2019 Date received the review results: 4/9/2020 Date published the article: 25/9/2020 Abstract: In recent years, scientifi c and technical achievements applied in the agricultural sector have created rapid development, forming a driving force for growth and contributing to stability in many countries. As an agricultural country, the value of the agricultural sector accounts for about 20% of GDP, with many potentials in agriculture as land and a large workforce, the issue of attracting investment in agricultural development has always been focused in socio-economic policies of Vietnam. The Red River Delta is the largest agricultural region in the North, so a breakthrough should be made to attract investment from agricultural development enterprises. Keywords: solution, attract, agriculture; investment; Red river delta. * Regional Political Academy I 1. Attract enterprise investment to agriculture Investment is an indispensable factor for development, is the key to economic growth. The resources used to invest can be money, natural resources, labor, wisdom ... In the market mechanism, investment activities can be attributed to diff erent entities (individuals, organized) and increasingly rich and varied in both nature and purpose. Business investment is the incorporation of resources into an activity in order to gain a greater amount of value. Business investment in a major economic sector is business investment. According to Clause 5, Article 3 of Vietnam’s Law on Investment 2014: “Business investment is the investment by an investor to carry out business activities through the establishment of economic organizations; investing in capital contribution, purchase of shares or capital contributions of economic organizations; investing in the form of contracts or implementation of investment projects”. Agriculture is a unique and very diverse economic sector. Farmers live in agricultural production associated with rural areas, production associated with nature, with the environment and facing many risks, especially in undeveloped countries, with outdated science and technology and in the context of climate change. Farmers are producers and consumers of 2 Nghiên cứu trao đổi ● Research-Exchange of opinion their own products. Therefore, the lack of coordination in a production chain (material supply, processing, and product consumption) remains low, the contribution from the agricultural sector and national income is not high and unstable. Stemming from the role and importance of agriculture to socio-economic development, meeting the requirements of international economic integration shows that attracting investment of enterprises in the agricultural sector is absolutely necessary. Specifi cally: - Firstly, attracting enterprises’ investment in the agricultural sector to contribute to exploiting the local agricultural potentials and advantages. Investment of enterprises holds a very important position in the development and mobilization of social resources in exploiting the local potentials and strengths in the agricultural sector. Agricultural production provides food for life, ensures raw materials for other industries, and generates revenue when exporting agricultural products. - Secondly, attracting investment from businesses in agriculture contributes to reducing risks and increasing capacity in agricultural production. Agriculture is a manufacturing industry with many high risks. Attached to nature, the risk factors in agriculture are manifested in the fact that the production process depends on weather conditions, climate change, diseases and agricultural market fl uctuations. Agriculture and farmers have a very close relationship, the bond of interests between businesses and farmers creates a mechanism for both sides in working to reduce risks, to protect their own interests as well as of partners. - Third, attracting investment from businesses in agriculture contributes to creating added value for agricultural products to expand the market and apply scientifi c and technological advances. Through attracting businesses’ investment in production and support to their farmers, agricultural production has the conditions to apply advanced science and technology achievements to the production process. Normally, if the production is on a small scale, farmers do not have enough fi nancial and technical resources to invest in stages such as breeding, harvesting, post-harvest preservation, processing and brand development. In order to attract enterprises’ investment in the agricultural sector in localities, it is necessary to implement the following contents: - Develop a strategy to attract investment of businesses on the basis of planning of concentrated agricultural production areas. - Develop and implement policies to attract businesses to invest in the agricultural sector. - Attract resources of businesses to invest in the fi elds of production and business in agriculture. 2. Current status of the enterprise’s investment in the agricultural sector According to the Ministry of Planning and Investment, currently, there are more than 49,600 enterprises investing in the agricultural sector, accounting for about 8% of the total number of operating enterprises. However, enterprises directly producing agricultural, forestry and aquatic products only account for about 1% of the total number of enterprises with the number of 7,600 enterprises; The rest are enterprises in the chain of industries related to agriculture such as processing; supply of raw materials, commercial service enterprises ... 3Nghiên cứu trao đổi ● Research-Exchange of opinion According to the Ministry of Planning and Investment, about 90% of enterprises investing in the agricultural sector are private enterprises; the rest are state-owned enterprises, FDI enterprises. Capital resources of enterprises operating in the agricultural sector only account for about 8% to 10% of the total capital of the entire enterprise sector. In particular, the capital of enterprises directly producing only about 1%. In fact, there are many preferential policies to attract businesses to invest in agriculture and rural areas. However, in reality, these incentives are not attractive enough, so the eff ectiveness of attracting businesses to invest in agriculture and rural areas is not high. To improve this situation, recently, the Government has issued Resolution No. 53 / NQ-CP on solutions to encourage and promote enterprises to invest in effi cient, safe and sustainable agriculture. The strategy for the development of agriculture and rural areas for the period 2011 - 2020 defi nes: Building the Red River Delta region is truly the pioneer area of the country to implement “strategic breakthroughs”, economic restructuring, successfully reformed the growth model, becoming the country’s leader in economic development. Most of the provinces in the Red River Delta (Ha Nam, Nam Dinh, Thai Binh, Hai Duong, Ninh Binh, ...) lead the country in land consolidation and land accumulation to form large fi elds, to bring mechanization in production to improve labor productivity, thereby forming concentrated production areas, such as: the carrot growing area in Gia Binh is 700 ha wide and the potato growing area in Que Vo is nearly 1,500 ha ( Bac Ninh); the carrot growing area in Cam Giang (Hai Duong) is over 500 ha wide; the onion and garlic growing area in Kinh Mon (Hai Duong) is over 3,000 ha; the fl ower and ornamental plant area in Van Giang (Hung Yen) is over 250 hectares wide, ... TH Group Joint Stock Company is researching and building a hi-tech agricultural zone in the alluvial ground of Day river; riverside alluvial ground and Red river isle through the territory of districts of Phuc Tho, Dan Phuong, Me Linh and districts of Bac Tu Liem, Tay Ho, Long Bien and Hoang Mai. Bao Chau Farm Joint Stock Company (Soc Son District) is one of the pioneering units of organic pig farming under eff ective microbiological technology (EM-Eff ective) of Japan. The program has a regular scale of raising 250 breeding sows and 3,000 commercial pigs for biological breeding. Closed chain and all frozen meat products are sold at 88 convenience stores across the country. The application of high technology in agricultural production has been actively researched and applied by many enterprises and households, bringing about high economic effi ciency, such as: the model of fi sh farming by means of pond living in Ha Nam, Hai Duong and Hung Yen; the model of growing vegetables according to Israel’s economical irrigation technology in many provinces; the rice- rice model in Quang Ninh; models of cultivating cordyceps in Bac Ninh; model of shrimp farming in tanks in Nam Dinh, ... models of growing aromatic melons varieties Kim Queen, Kim Co Luong, Kim Vuong imported are produced in net houses, home-sized screen houses, grown on substrates; using Israel’s automatic drip irrigation and fertilization system; Apply hydroponic nutrition formula, supply according to the needs of the plant. 4 Nghiên cứu trao đổi ● Research-Exchange of opinion In the Red River Delta, a number of provinces have successfully built a number of organic agricultural production models, creating clean and safe products to meet the needs of consumers such as: organic vegetables and fruits of Thien Truong High Tech Agricultural Trade Service Company Limited, 36, Dong Tien commune (Dong Son - Thanh Hoa) with an area of 3.2 hectares, growing vegetables mustard greens, amaranth, morning glory, spinach, tomato, cucumber, stomach cucumber, Kim Hoang melon ... fertilization, expected harvest date ...; Model of organic rice production by Lam Son Sugar Joint Stock Company, an area of 283 hectares in Van Ha town (Thieu Hoa) is also one of the few models of organic agricultural production, bringing effi ciency and high economic value; The organic vegetable model in Trac Van commune (Duy Tien district) has been creating great value and the trust of consumers, product brand has been positioned in the consumer chain. Currently, the Red River Delta has formed a number of agricultural zones applying high technology but the effi ciency is not high. The main reason is due to: the local government is not determined enough; the selection of models and products to produce is not suitable; Financial capacity is not strong enough to make infrastructure investment and attract businesses. Some localities make mistakes in technology choices, even though they have fi nancial capacity (outdated technology or too high technology), as well as expensive investment and operation costs, resulting in ineffi cient production. Typically, the hi- tech agricultural zones in Hanoi and Hai Phong are invested tens of billions of dong to import foreign full-package technology, but the technology transfer process is slow and the operating cost is too high. 3. Proposal to attract enterprises’ investment in the agricultural sector Agriculture is a particularly important fi eld, creating social stability and improving the quality of life for farmers, contributing to the economic development of the country. According to experts, the agricultural industry wants to make a breakthrough to become a solid pillar, it should not be inseparable from the business. Therefore, businesses must be attracted to invest. From practice and theory, the article indicates that it is necessary to take some of the following measures to attract more investment from businesses in the agricultural sector: - Eff ectively enforce central/ provincial policies to attract enterprises’ investment in the agricultural sector as: clarify responsibilities of departments/ sectors to avoid cumbersome administrative procedures that cause troubles, diffi culties for businesses, aff ecting the investment environment; regularly review and promptly report to the Government for deciding to change or supplement the adjustment to increase or decrease the level of support and benefi ciaries in accordance with each specifi c project, each development stage and special point to each agricultural production project. - It is necessary to develop policies to encourage investment in a number of industries applying advanced scientifi c and technological achievements, and investment projects in developing post- harvest preservation and processing technologies to increase competitiveness, 5Nghiên cứu trao đổi ● Research-Exchange of opinion value added and the ability to join the global production network and value chain of agricultural products. Clearly defi ne the priority to attract businesses to use environmentally friendly high technology in agricultural projects. - Complete and adjust the planning of concentrated agricultural production areas in the Red River Delta region (in particular planning agricultural land) to create confi dence and attractiveness for businesses. Building a cooperation model to ensure benefi ts when people transfer land use rights to investors through business cooperation plans, associated with ensuring stable and long-term land use capacity according to investors’ planning and production plans. Simplify and clarify administrative procedures in transferring land rights, granting certifi cates of use- land rights to investors; Create favorable conditions in licensing for investors to build production and business establishments on land; Provide fi nancial support from the state budget or other preferential loans for site clearance, compensation for property on land for people to contribute land to contribute to business. - To develop policies to support agricultural enterprises when they suff er from natural disasters or are exposed to risks caused by fl uctuations in agricultural markets, it is necessary to continue to study solutions to mobilize internal and external resources from the state budget to support investment in the construction of agricultural infrastructure (roads, warehouses, irrigation ...), to increase the ability in preventing natural disasters, price fl uctuations of agricultural products and epidemics; to set up and use eff ectively the agricultural insurance fund, to support enterprises in facing these fl uctuations. - To build agricultural development investment funds according to the priority directions to attract agricultural investment, through these funds, to fi nance agricultural projects, support investment credit for enterprises on the basis of ensuring priority for development and realization of approved agricultural plans. Incentives are granted to businesses complying with agricultural production conditions meeting the requirements of sustainable development in the Red River Delta. References: [1]. Nguyễn Sinh Cúc (2013), “Overview of Vietnam’s agriculture and rural areas after 25 years of implementing Resolution 10 of the Politburo (term VI) ”, Journal of Economics and Management, số 11/2013 [2]. Ho Chi Minh National Academy of Politics (2018), Proceedings of the Scientifi c Conference “New dynamism for Vietnam’s agricultural development today”,Hà Nội [3]. Vũ Văn Hùng (2018), “Some issues that need to be further studied in the development of agricultural land policy in Vietnam ”, State Management Journal, (266). [4]. The State Bank of Vietnam (2017), “Results of implementing credit policies for agricultural and rural development”, Proceedings of the National Conference on promoting businesses to invest in the agricultural sector, Hà Nội. [5]. Đặng Kim Sơn (2012), Agricultural and rural development - From theories applied to Vietnamese policies and strategies: Economic theories applied to Vietnam, Publishing House. National politics, Hà Nội. [6]. Erinch Sahan (2012), Private Investment in Agriculture: Why it’s essential, and what’s needed, Oxford, UK: Oxfam GB for Oxfam International, September 2012. Author address: Regional Political Academy I Email: tampvhn@yahoo.com